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Result Reviews – 2QFY2011
TCS
TCS reported its 2QFY2011 numbers, which were way ahead of street as well as our
expectations on the revenue as well as profitability fronts. The company’s revenue stood at
US $2,004mn (v/s our expectation of US $1,927mn), reporting 11.7% qoq growth. This is
the first quarter ever when the company registered an incremental revenue of US $210mn
qoq (against Infosys at US $111mn). Strong growth was possible on the back of volume
growth of 11.2% (v/s our expectation of 8.1%). EBIT margins expanded by 86bp qoq (v/s
our expectation of flat growth) to historic high of 28%. The company managed to counter
the 166bp negative impact of promotion and variable allowances by productivity gains of
95bp, SG&A efficiency gains of 54bp and favourable exchange impact of 103bp. PAT
stood at `2,106cr (v/s our estimate of `1,990cr), posting 14% qoq growth. The company
remains our top pick amongst Tier-I IT companies because of its diversified portfolio on all
fronts service wise, industry exposure wise as well as geography wise. At the CMP of `986,
the stock is trading at 21x FY12E EPS of `47, with 5% upside to our target of `1,032.
We remain positive on the stock and will be revising our estimates upwards post the
conference call.
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